[Edaily Reporter Kim Sang-yoon ] When SK hynix(000660)announced its third-quarter earnings, Wall Street focused not only on the record-high operating profit margin of 80%. Investors placed even greater significance on the company’s forecast that the memory semiconductor supply shortage would persist through 2030. This means that, beyond how strong the earnings were, investors’ primary concern was whether the company could continue to generate such high profits in the future.

According to the U.S. business media outlet MarketWatch on the 28th (local time), SK hynix’s third-quarter revenue reached 104.62 trillion won, exceeding market expectations by 7%. The operating profit margin also hit 80%, higher than the forecast of 78.4%. This means the company generated 80 won in operating profit for every 100 won in revenue.

This result stems from a combination of rising memory prices and increased sales of high-end products. The average selling price (ASP) of DRAM rose by the high 20s percent compared to the previous quarter, while that of NAND flash rose by the mid-20s percent.

However, in the semiconductor industry, it is difficult to be optimistic about the long-term outlook based solely on current strong results. This is because there has been a recurring pattern: when demand increases and prices rise, companies expand their production facilities, which subsequently leads to an oversupply, causing prices and earnings to fall again.

This is why some are questioning whether the market will ultimately revert to a state of oversupply this time as well.

SK hynix pointed to rising demand driven by the spread of AI and the challenges of expanding production as grounds for the possibility of a long-term boom.

On the demand side, SK hynix highlighted the cycle where AI investment begets further AI investment. The company explained that when businesses adopt AI to boost productivity and generate new revenue, they make additional investments, which in turn increases demand for memory. It also cited the expanding scope of AI applications—such as in autonomous driving and robotics—as a factor supporting demand.

On the supply side, the company emphasized that simply expanding factories does not immediately result in a flood of products. This is because advanced manufacturing processes are technically challenging, and constructing new production facilities takes a long time.

In particular, high-performance products such as High Bandwidth Memory (HBM) require more resources for production. As the proportion of such products grows, it becomes increasingly difficult to gauge the actual increase in supply based solely on the scale of factory expansions.

This is precisely what Wall Street viewed positively. If demand continues to rise due to AI investments while supply expansion remains sluggish, memory companies will have greater scope to maintain high prices and profitability.

C.J. Muse, an analyst at Cantor, noted that while the latest earnings were solid, the key driver for the stock price is the strong outlook presented by the company. He explained that management’s comments support the view that memory supply will fail to keep pace with demand through 2030.

He analyzed that securing semiconductor equipment takes one to two years, limiting the ability to rapidly expand production capacity.

J.P. Morgan analysts also noted that the results exceeded even the upper end of institutional investors’ expectations, demonstrating management’s confidence that the high-margin memory boom will continue for an extended period.

SK hynix announced that it has secured long-term supply contracts for more than half of its production volume in 2027 and 2028. This move is interpreted as an effort to maintain high memory prices over the long term and secure future sales volume.

On the Korean stock market that day, SK hynix’s stock price rose by about 11%, while SamsungElectronics’ rose by about 9%. On the U.S. stock market, SK hynix’s American Depositary Receipts (ADRs) rose by about 10%, and Micron Technology’s rose by about 5%.